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15/09/2016

KB News Bites: Late to inflate

Late to inflate: UK headline inflation remained at 0.6% in August, the same level as July, and lower than many had expected given the generally weaker currency. The undershoot in inflation led to a steep Sterling fall of over 1% – to $1.32 – as it puts less pressure on the Bank of England to raise rates or taper the monetary stimulus measures currently underway. (14/9)

Cloudy, good only for lemonade: Ratings agency Standard & Poor's believes signs of a post-“Brexit” vote recovery in the UK's economy may prove a "mirage" as ongoing uncertainty about the end-state of the country's relationship with the EU has led to a “cloudy longer-term outlook”. Indeed, as of now, there is little clarity on when Article 50 – the official beginning of negotiations to leave the Union – will be declared. David Davis, the UK’s “Brexit minister”, has admitted it may be a “rather frustrating time”.  (13/9)

Nothing to fear but fear itself: Financial markets have been roused from a summer slumber by the prospect of tighter monetary policy from the Federal Reserve next week. Fear – as measured by the Volatility Index – has spiked since Friday. However, at 18, it is still below its historic average of 20. Moreover, it is far below the peaks witnessed early in the year due to the China growth scare, when it got to as high as 28, and the “Brexit” referendum, where it hit 26. (15/9)

Freeze dried: World crude prices fell again yesterday – Brent crude is trading at just above $46; WTI crude is below $44 – as a sharp increase in the inventory of refined products overshadowed a marginal reduction in raw crude stockpiles. In addition, talks of a production freeze at this month's OPEC meeting appear to have gone rather flat, with Libya’s state oil company now saying it would double production. Act surprised. (15/9)

Frightsbridge: The average UK house price was £217,000 in July, up £1,000 from June. Though the increase was marginal, it is significant as this is the first full month’s data following the EU referendum, where some were expecting a significant reversal. Indeed, prices in London were also up by £5,000; they now average £485,000. However, anecdotal evidence suggests that some of the choicest parts of the capital are seeing prices correct somewhat from previously nosebleed levels. (14/9)

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